SEC: Insider trades on Heinz deal

WASHINGTON — The Securities and Exchange Commission on Friday received a court order freezing a Zurich, Switzerland, account on suspicions of insider trading in the takeover of H.J. Heinz.

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By MarketWatch

MailTribune.com

By MarketWatch

Posted Feb. 16, 2013 at 2:00 AM

By MarketWatch
Posted Feb. 16, 2013 at 2:00 AM

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WASHINGTON — The Securities and Exchange Commission on Friday received a court order freezing a Zurich, Switzerland, account on suspicions of insider trading in the takeover of H.J. Heinz.

The SEC alleges that options traders made a profit of more than $1.7 million from knowing that Berkshire Hathaway and 3G Capital were going to buy Heinz for $28 billion, or $72.50 a share.

The SEC found suspicious the fact that defendants bought 2,533 out-of-the-money June $65 calls a day before the deal was announced, after never having traded Heinz previously in the account. The account identifies the Zurich account as being at GS & Co. — a name Goldman Sachs Group Inc. uses for its options broker.

The nearly $90,000 investment surged in value by more than 1,700 percent. The June $65 calls were not actively traded before the deal was announced. On Feb. 12, for instance, only 14 calls were purchased.

That the trades occurred in a Goldman account doesn't mean that they were by Goldman employees. Nor is there any indication of wrongdoing by employees at Berkshire Hathaway, 3G Capital, Heinz or any of the advisers on the deal.